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El blog de Maria

Your daily Spanish Law reporter. Have it with a cafe con leche.

Legal tip 1430. Reclaim overpaid Capital Gains Tax on Sale of Property (Plusvalía)
21 February 2017 @ 12:25

Spain’s Constitutional Court (CT) has annulled and forced the reform of the municipal tax on capital gains when selling a property.  This tax is commonly known in Spain as Plusvalía municipal, which in theory taxes the revaluation of real estate when it is sold even if the property is sold at a loss.

The Constitutional Court considers unconstitutional taxes that affect “those cases in which the economic capacity taxed by the tax is, not already potential, but non-existent, virtual or fictitious”

The ruling of the Constitutional Court which was unanimously adopted, has partially upheld the question of unconstitutionality raised by the Administrative Court No. 3 of Donostia, in relation to several articles of Regional Regulation 16/1989, of July 5, of the Tax on the Increase of Value of Urban Land of the Historical Territory of Gipuzkoa.

The Court considers that the said tax is contrary to the principle of economic capacity, provided for in the Constitution.

The ruling recalls that the principle of economic capacity is not only present in the tax system as a whole, but must be present in each tax. “It does not fit in our system”, affirmed the Tribunal.

Actions for claiming back this tax have a time-bar of 4 years

A view of Benaocaz, Cádiz, South western Spain

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